Nairobi can now transfer county revenue funds to the state-run Nairobi Metropolitan Services.
NMS runs core county functions.
Governor Mike Sonko had refused to release funds to NMS and the refusal was at the centre of his impeachment on Thursday. He accused State House “cartels” of blocking him.
In a letter dated November 30, Treasury CS Ukur Yatani directed Governor Sonko to release funds to NMS. He said his ministry had developed the required legal framework in line with the requirements of the functions’ Deed of Transfer.
“The purpose of this letter is to forward to you the framework and request you to ensure adherence to the requirements,” Yatani said.
The letter was addressed to Sonko and NMS director general Mohammed Badi.
Last month, the CS had denied Badi’s request to have county funds released to pay 6,852 staff seconded to the office.
Yatani said there was no legal provision to release funds to NMS. He said funds only can be released to the Nairobi county government through the County Revenue Fund.
In a letter to Badi dated October 15, the CS said Section 4(2) of the County Allocation of Revenue Act, 2020 provides that each county government’s allocation under Subsection (1) shall be transferred to its County Revenue Fund.
Yatani said negotiations were underway on issues of the Deed of Transfer of functions after Sonko issued a notice of Declaration of Dispute on July 24. The governor cited Article 11.2 of the Deed of Transfer.
However, in his recent letter, CS Yatani said the framework developed by the Treasury takes into account constitutional and legal provisions as outlined in County Allocation of Revenue Act (CARA), 2020.
He emphasised that the framework complies with every legal and constitutional provision pertaining to the funding of NMS in accordance with Article 187(2)(a) of the Constitution, Article 5.1 and 5.2 of the Deed and CARA Sections 7(1)(2) and (3).
The letter was copied to Controller of Budget Margret Nyakang’o, NMS deputy director General Kang’ethe Thuku and Attorney General Kihara Kariuki.
The letter was sent three days before Sonko was impeached.
Sonko refused to assent to the Sh37.5 billion for 2020-21 after it was passed by the assembly on October 8.
He sent it back with a memorandum, recommending it be reduced to Sh31.6 billion “in accordance with the County Fiscal Strategy Paper 2020-21 and budget estimates presented by the executive”.
Sonko said the budget was changed by State House “cartels” that support the Nairobi Metropolitan Services, which the governor calls illegal.
The budget allocated Sh27.1 billion to the NMS, Sh8.4 billion to Sonko’s administration and Sh2 billion to the assembly.
Sonko’s memorandum was rejected by the assembly on November 3 but he still refused sign it, resulting in the stalemate.
However, the bill became law after seven days as legally required. No cash could be released, however, until the governor signed warrants authorising the withdrawal of money from the County Revenue Fund at the Central Bank of Kenya.
The governor asserted he will not be pushed to release funds to an “illegal entity” (NMS) run by State House “cartels” that he said were out to frustrate him.
For six months since June, the executive and the assembly have been surviving on a Sh8.5 billion Vote on Account, which is 25 per cent of the annual budget.
However, the Controller of Budget stopped the Vote on Account after MCAs passed the Nairobi County Assembly Appropriation Bill, 2020.
Salaries have not been paid for two months for the executive, City Hall staff, MCAs, assembly staff and NMS staff because Sonko refused to release funds.
The county cannot incur recurrent and development expenditure until the 2020-2 budget is uploaded for funds to be released.
“We are staring at a total stalemate because the Central Bank of Kenya, Controller of Budget and the National Treasury need the governor’s warrant to implement the budget,” Sonko’s spokesman Ben Mulwa said.